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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Alpha Natural Resources Inc was -0.58. The lowest was -4.09. And the median was -2.92.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Alpha Natural Resources Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.7959||+||0.528 * 0.5195||+||0.404 * 0.4609||+||0.892 * 0.849||+||0.115 * 1.0314|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0222||+||4.679 * -0.0835||-||0.327 * 1.0211|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $249 Mil.|
Revenue was 841.989 + 1070.615 + 1050.592 + 1054.098 = $4,017 Mil.
Gross Profit was -9.494 + 133.046 + 55.79 + 103.121 = $282 Mil.
Total Current Assets was $1,561 Mil.
Total Assets was $10,169 Mil.
Property, Plant and Equipment(Net PPE) was $8,205 Mil.
Depreciation, Depletion and Amortization(DDA) was $812 Mil.
Selling, General & Admin. Expense(SGA) was $136 Mil.
Total Current Liabilities was $944 Mil.
Long-Term Debt was $3,142 Mil.
Net Income was 68.211 + -121.661 + -184.975 + -512.627 = $-751 Mil.
Non Operating Income was 363.683 + 6.573 + 16.814 + 0.74 = $388 Mil.
Cash Flow from Operations was -59.784 + -30.711 + 17.861 + -217.048 = $-290 Mil.
|Accounts Receivable was $369 Mil.
Revenue was 1111.773 + 1093.7 + 1191.094 + 1335.123 = $4,732 Mil.
Gross Profit was 80.987 + 75.75 + -54.53 + 70.629 = $173 Mil.
Total Current Assets was $2,038 Mil.
Total Assets was $11,834 Mil.
Property, Plant and Equipment(Net PPE) was $8,777 Mil.
Depreciation, Depletion and Amortization(DDA) was $898 Mil.
Selling, General & Admin. Expense(SGA) was $157 Mil.
Total Current Liabilities was $1,290 Mil.
Long-Term Debt was $3,366 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(249.266 / 4017.294)||/||(368.898 / 4731.69)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(133.046 / 4731.69)||/||(-9.494 / 4017.294)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1560.551 + 8205.317) / 10169.447)||/||(1 - (2038.041 + 8776.743) / 11833.703)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(898.294 / (898.294 + 8776.743))||/||(811.721 / (811.721 + 8205.317))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(135.871 / 4017.294)||/||(156.558 / 4731.69)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((3142.018 + 943.913) / 10169.447)||/||((3366.178 + 1290.341) / 11833.703)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-751.052 - 387.81||-||-289.682)||/||10169.447|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Alpha Natural Resources Inc has a M-score of -3.67 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Alpha Natural Resources Inc Annual Data
Alpha Natural Resources Inc Quarterly Data